Industry leaders are taking off the rose-colored glasses when asked to predict what 2009 will look like for the boating business. Mincing no words, they use terms such as “challenging,” “tough,” “dismal” and “crisis” to describe economic conditions going into the new year.
But none is predicting the demise of the industry, either. Boating, they say, will come back leaner but stronger than ever, thanks to the lessons learned from what the industry experienced in 2008, some of which was unprecedented. A “perfect storm,” is how many described it.
But the long-term opportunities for boating are very promising, says National Marine Manufacturers Association president Thom Dammrich. For example, in the next 40 years, the U.S. population is projected to grow by 50 percent — to 450 million people, he points out.
“If we can get one-third of these new Americans interested in boating … it would represent 80 percent more people boating in the next four decades,” Dammrich says. “We don’t even need to convert a lot of these potential new boaters into boat owners to have a significant impact on new-boat sales.”
The consensus of those who shared their views with Soundings Trade Only is that the industry is likely to begin seeing improvement by the end of 2009.
Genmar’s Irwin Jacobs says a rebound could begin as early as the first quarter, but clearly he is in a minority. He bases his optimism on the advent of the new administration in Washington, saying President-elect Barack Obama’s team is bringing positive change that will help restore consumer confidence.
The experts agree that while there’s no question it’s tough out there, there are people buying boats, and financing is available for those who qualify. Boating has not gone away.
Dealers have to expect higher credit score requirements for their customers, shrinking loan advances, increasing down payments and reduced debt-to-income ratio factors, says Jim Coburn, president of the National Marine Bankers Association.
“Consumer boat loan rates will still remain relatively low and as appealing as they have been for several years,” says Coburn. “We expect a modest rate increase sometime in 2010 as the market improves.”
Many talk about the need to provide value-added services and products, claiming customers simply expect more in these times. They say innovation is a key to success.
“It takes truly new products that you can’t buy used to get people excited,” says Bob Johnstone, chief operating member at MJM Yachts. “The importance of unique, new product cannot be overstated.”
Businesses also must be prepared to make the tough cuts necessary to survive, and, unfortunately, that may mean more layoffs in 2009.
“I believe that dealers must adjust as necessary as it relates to staffs, overhead and inventory,” says Phil Keeter, president of the Marine Retailers Association of America. “But they must continue to pursue the consumer in every possible way."
One thing all industry leaders have in common is their belief that boating will survive and ultimately thrive. This industry, while it may shrink and change, is not going away, they maintain.
“I don’t believe it will be the business as we knew it anytime in the near future, if ever,” says Wanda Kenton Smith, president of the Marine Marketers of America. “We must adjust and rethink every aspect of our business. We’ll learn hard-fought lessons from our own restructuring models that should allow us to operate leaner, more efficiently and hopefully back to a profit position in the future.”
Perhaps Johnstone puts it best when he says, “And remember … boating is still the best adventure a family or couple can enjoy together. What better time than now to leave the troubles ashore. Life’s short. Time to buy a boat!”
This article originally appeared in the January 2009 issue.